The Financialization of Fun: Crypto Gaming Thesis

Even if a game nails the crypto-economics, if it’s mediocre it will at best poach users from other crypto-first games without making a dent on the 200B online gaming industry. I believe that the games that end up succeeding over the next decade are the ones that use crypto to unlock fresh gameplay mechanics instead of simply forcing P2E mechanics i... See more

At the same time, crypto also enables another type of participant alternative to the conventional gamer: the gaming enthusiasts, collectors and money-makers. These people are not necessarily playing the games but can be supporting the space by taking other sides of trades, betting, attending events, watching streams, speculating and collecting gami... See more

While many will try to supplement knowledge gaps with crypto-native VCs/advisors who tout they can handle the tokenomics, in reality, the one-in-a-million game is going to be a result of crypto-natives working hand-in-hand with experienced game developers/economists to take a “player first” approach to solve difficult design problems.

Game psychologists note that a lot of the joy and addiction comes from unexpected and randomized rewards. The ability to easily acquire a known reward with money might actually rob the games of what makes them fun. The direction of NFTs and many P2E games are fast racing towards pure financialization which could ultimately kill core gameplay. Espec... See more

Games where earning is at the core are also inheriting a difficult sustainability problem. It’s impossible to create an economy that constantly grows. Axie earnings have already started to decline, which will soon make the game undesirable for their current player base who are primarily playing to earn. If new entrants cannot win and turn a profit,... See more

2) “Earn-first” crypto games where the main allure, gameplay and fun ultimately come from earning money by participating in crypto game economies.

The auction house is a case study on how financializing game assets can short circuit the natural pace of item drops, making the game feel less rewarding for some players.

Much like how DeFi protocols can’t just rely on inflationary tokenomics and yield to sustain their product, games that are first and foremost fun to play without being crypto-first are strong contenders in this space because they can stand alone as a product. But these games will have some lag time before we see more of them come to market because ... See more

In the medium term, we’re going to see more gameplay-first games launch with crypto concepts and innovations. These innovations will happen along a spectrum from cosmetic skins becoming NFTs to token models where gamers can play for ownership in a game.

crypto will unlock a paradigm shift in gaming. Though it’s still unclear what exactly that shift will look like, I believe that, in the short term, we’ll see earn-first crypto games like Axie and Zed Run create a black hole by onboarding players using financial incentives. Supplementing this growth will be guilds and DAOs on the periphery. In the m... See more